I just saw this on my Google reader.

Bronte Capital: The goldsmith as retail bank. The important part of the body is almost unrelated to the title. The State Bank of India has moved / is moving to make retail gold purchasing easier.

China recently announced something similar with gold and silver bullion.

In the US, advertisements of Cash4Gold on TV were thought to mark a top in Gold. When your grocery bagger decides it’s time to flip real estate / invest in gold, the trade is too crowded. Of course, bubbles always go on longer than most expect. Anyway, this sort of behavior from China and India might be interpreted the same way.

I view things differently, though. Instead of being bullish or bearish for gold, I see it as India and China being willing to devalue their currency in lockstep with the US without fear of hurting their citizens. Exporter nations generally don’t want their currency to appreciate against the dollar. Inflationary monetary policy hurts savers, but only if those savers are holding their domestic currency. If savers choose to hold a mix of currency, gold, and silver, the policies are much less damaging (within reason). Contrast this with the US, which twice outlawed ownership of gold while it devalued its currency.